Apple's 2011: A Preview

CUPERTINO, Calif. ( TheStreet) -- With the arrival of the widely-anticipated CDMA iPhone at Verizon ( VZ - Get Report) and a new version of the iPad expected, next year is set to be another big one for Apple ( AAPL - Get Report).

This year was huge for the tech giant and its investors; it marked the debut of the iPad, the iPhone 4 and the subsequent Antennagate debacle that briefly punched a hole in Apple's aura of invincibility.

Not that investors seemed overly concerned -- Apple's stock is up almost 52% this year and closed at a record high of $320.15 on Monday.

"There are plenty of catalysts to continue the trend of strong product development and updating -- getting the iPhone on Verizon is the biggest one for me," said Apple investor Chad Brand, president of Peridot Capital Management. "I think people may underestimate how many new subs they can get from that."

"I do expect them to upgrade the iPad in the first quarter, I do expect them to upgrade the iPhone and obviously there will be a Verizon iPhone," said Michael Yoshikami, chief investment strategist of YCMNET Advisors. "I think that the iPhone momentum is going to continue if you look at the rollout of the product globally."

Read on for what to expect from Apple next year.

Verizon iPhone

The Apple developer who screamed "Verizon!" at a bemused Steve Jobs during the iPhone 4 launch may soon get his wish.

Rumors of a Verizon iPhone have been swirling for well over a year -- it's an event that will mark the end of AT&T's ( T) exclusive deal to sell the phone in the U.S.

"Everything in our checks is pointing to a February launch of the iPhone at Verizon," Michael Walkley, an analyst at Canaccord Genuity told TheStreet. "We think it's going to sell very well and take share from Android."

Canaccord and other analyst firms have recently raised Apple estimates on the strength of a Verizon iPhone. Pacific Crest expects to see the Verizon model sometime in the March quarter and recently hiked its second-quarter iPhone estimate from 12 million to 15.2 million units.

Some analysts think it will arrive later: "While I am not convinced that it's going to be early 2011, I do think it will be launched by summer," Bill Kreher, senior technology analyst at Edward Jones, told TheStreet. "It would make sense to announce a CDMA iPhone with the iPhone 5."

Kreher pointed to the June 2010 launch of the iPhone 4 and speculated that Apple may keep to a similar launch schedule in 2011, announcing both the new iPhone and a Verizon deal. "If you look at the typical cadence of the Apple announcements, they announce a Mac refresh in January, iPads in April, iPhones in June and iPods in September," he said. "I don't know that they want to upset that."

iPad 2

Hitting shelves in April, the initial iPad has left late-coming rivals like HP ( HPQ) and Dell ( DELL) trailing in its wake. Apple sold 1 million iPads within four weeks of the tablet's debut; Samsung's Galaxy tab, which debuted overseas two months ago, just tipped the 1 million-sold mark.

"Next steps with iPad are obvious, and Apple has even alluded to them: enhance the product and drive down the entry price," said Ezra Gottheil, an analyst at Technology Business Research. "I expect a new iPad in the first half of 2011, with a price reduction on the current models."

"I think that Apple will reset the iPad bar in April," added Edward Jones analyst Bill Kreher. "We can expect a front-facing camera and a thinner form factor."

Kreher thinks that the front-facing camera will herald a major expansion of the Facetime video chat feature that first appeared on the iPhone 4. "The camera will feed into the explosive growth of Facetime," he explained. " Apple is offering this Facetime technology to other vendors, whether tablet or PC, and it will be interesting to see who adopts it."

"We think that Apple will sell just under 14 million iPads in 2010 and just under 27 million in 2011," said Canaccord's Walkley. "And some component build rates out there suggest that it could be a higher number."

iPhone 5

Apple's iPhone has enjoyed phenomenal success since its launch in 2007, and speculation is already mounting about the iPhone 4's successor.

"With the iPhone, we can expect the traditional new model mid-year," said TBR's Gottheil. "In addition to the usual smaller, faster, lighter features, longer battery life and better antennas, we could look for a stronger GPS application and more extensive use of voice recognition technology."

There has also been chatter that the next iPhone will contain Qualcomm's World Phone chip, enabling the device to work on both GSM and CDMA networks around the world.

"I'm not aware of any technical barriers to this, and it just makes a lot of sense, since consumers would then have the freedom to choose their preferred broadband vendor wherever they happen to be," explained Scott Grannis, an Apple and Qualcomm investor who writes the Calafia Beach Pundit blog.

Jack Gold, principal analyst of Jack Gold Associates, told TheStreet that he expects to see Apple push harder into the enterprise market and possibly introduce a lower-priced iPhone that could meet the needs of emerging markets. This, he said, could be priced at $199 or lower.

While Apple's growing popularity in the enterprise is undoubted -- a handful of Wall Street firms have reportedly added the iPhone to their list of work-approved devices -- a low-cost iPhone has proved something of a prickly issue for the tech giant. Jobs bristled when an analyst asked him about the possibility of a $100 iPhone during Apple's recent fourth-quarter conference call.

Apple Shares

Apple shares are currently trading around $320, although Wall Street expects it to rise. Pacific Crest recently raised its 12-month Apple price target from $330 to $355, and Peridot Capitol is going even higher: "The sheer earnings power of the company and future growth opportunities allow me to comfortably predict a share price between $350 and $400 over the next 12-18 months," said Chad Brand of Peridot. "We continue to hold the shares confidently."

Joel Achramowicz, senior vice president of research at investment bank Blaylock Robert Van is less bullish, though. "I don't think that the stock is going to do nearly as well as it did in 2010," he said. "I think it's close to peaking -- price is very important to people and the risk is too high." Achramowicz, who holds a neutral rating on Apple, also said, "If something happened and there were a slip or a manufacturing issue, the share price could move precipitously south."

Apple's cash haul, currently at $51 billion, will also cause a few investor questions over the next year. "I would like to see Apple pay a dividend starting next year," said Scott Grannis. "The amount of cash on the balance sheet is so large, and so likely to keep growing, that it is very difficult to see the rationale for not paying a dividend."

Shareholders should probably not hold their breath, if recent comments from Jobs are anything to go by. "We have demonstrated a strong track record of being very disciplined with the use of our cash ," he said during the company's fourth-quarter conference call. "We would like to keep our powder dry because we believe that there are one or more unique strategic opportunities in the future."

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